Aussie-style restrictions may not be the answer: Alexander
Restricting the sale of houses to foreign buyers may not help Auckland’s housing situation, BNZ chief economist Tony Alexander says.
Monday, April 14th 2014, 12:00AM
by The Landlord
He said: “I have for the past year advocated that we mitigate the effect of unrestricted foreign buying of our houses and apartments on prices and societal cohesion by adopting Australia’s legislation.”
Australia only allows non-resident buyers to purchase new properties.
Alexander said the issue would become more pressing as incomes grew in China, and investors sought out property over investment in other assets.
But other countries’ attempts to address the issue have not been completely successful.
Alexander said that in London many higher-priced, newly-built homes were sold to foreigners, and many sat empty for years. In Australia, 11% of new builds are sold to foreign buyers.
He said there were concerns the system was not working in Australia and would push prices higher as residents found it harder to find accommodation because builders were busy constructing properties for foreign buyers.
“Given these concerns, which have prompted a new government investigation into the matter, and given the London situation of building new houses for non-Brits, the clear risk is that simply adopting Australia’s legislation would not be enough to mute the worsening accommodation problem in Auckland.”
He said just because consent numbers rose, it did not mean that housing stock was growing at the same pace. “If houses are built or bought and sit empty then no-one bar the builders and previous owners moving out of the area win.”
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